Bank Accounts, Trusts, or TOD? Choosing the Right Strategy to Avoid Probate in California

Probate in California can be time-consuming, expensive, and public. Many people want to ensure that their loved ones can access funds or property quickly after their death—without the delays of probate court.

Fortunately, several estate planning tools are available to help assets bypass probate, including bank account beneficiary designations, revocable living trusts, and Transfer-on-Death (TOD) strategies. But which option is right for you?

This guide compares the pros and cons of bank accounts with beneficiaries (PODs), living trusts, and TOD accounts and deeds to help you choose the most effective probate-avoidance strategy for your estate.

Option 1: Bank Accounts with Payable-on-Death (POD) Designations

What It Is:

A Payable-on-Death (POD) designation allows you to name a beneficiary who will automatically receive the funds in your bank account when you die—without probate.

Benefits:

• Easy to set up at the bank

• No legal fees or trust documents required

• Avoids probate entirely

• Beneficiary gets immediate access upon your death

Limitations:

• Only applies to that one account

• Doesn’t offer control over when or how the money is used

• If the beneficiary dies before you and no backup is listed, the account goes through probate

• Does not protect against incapacity (e.g., dementia)

Best for: Individuals with simple estates who want to ensure loved ones can quickly access cash after death.

Option 2: Revocable Living Trust

What It Is:

A revocable living trust is a legal document that holds title to your assets during your lifetime. Upon your death, your named successor trustee distributes those assets according to your instructions—without court intervention.

Benefits:

• Covers multiple asset types: real estate, bank accounts, investments, personal property

• Avoids probate entirely

• Includes incapacity planning

• Allows for control, staggered distributions, and backup beneficiaries

• Maintains privacy (not a public record)

Limitations:

• More complex to set up

• Must be “funded” (assets retitled in the name of the trust)

• May require legal assistance to draft properly

Best for: Individuals or families with real estate, blended families, or those who want detailed control over how their estate is handled.

Option 3: Transfer-on-Death (TOD) Accounts and Deeds

What It Is:

TOD designations allow assets—such as investment accounts or real estate—to transfer directly to named beneficiaries upon death.

• TOD accounts are available through most brokerage firms.

• TOD deeds (Transfer-on-Death Deeds) allow California homeowners to name a real estate beneficiary without probate.

Benefits:

• Simple and low-cost

• Avoids probate

• Beneficiary takes title immediately after death

Limitations:

• TOD deeds must be properly executed and recorded before death

• No control over timing of distribution

• Can be challenged or invalidated if not correctly prepared

• No protection for beneficiaries with special needs or creditor issues

Best for: Individuals who own property or investments but do not want to create a trust.

🔍 Comparison Table

Strategy	Avoids Probate	Covers Multiple Assets	Protects Incapacity	Control Over Distribution	Cost to Set Up
POD Bank Account	✅ Yes	❌ No	❌ No	❌ No	Low
Revocable Living Trust	✅ Yes	✅ Yes	✅ Yes	✅ Yes	Moderate to High
TOD Account/Deed	✅ Yes	❌ No (per asset)	❌ No	❌ No	Low

Final Thoughts: Choosing the Right Approach

No single strategy fits everyone. Your best choice depends on the size and complexity of your estate, your family dynamics, and how much control you want over what happens after you’re gone.

Here are some general guidelines:

• Use PODs and TODs for straightforward transfers and emergency access to funds.

• Use a revocable living trust for comprehensive planning, real estate, incapacity protection, and family coordination.

• Use a combination of all three to create a layered and effective estate plan.

Before making decisions, consult with an experienced California estate planning attorney to ensure your plan is properly structured and legally valid.

Contact the top-rated California trust and probate attorneys Moravec, Varga & Mooney today to schedule a telephonic consultation. Have questions? call (626) 460-1763 or email LV@MoravecsLaw.com.

Southern California Probate Lawyer Serving all counties in California, including Los Angeles, Riverside, San Bernardino, Sacramento, Santa Cruz & Beyond.